We recently published a list of 10 Best Railroad Stocks To Buy Now. In this article, we are going to take a look at where Union Pacific Corporation (NYSE:UNP) stands against other best railroad stocks to buy now.
In February, the Association of American Railroads reported that intermodal volumes remained robust, rising 6.4% year-over-year. Weekly originations hit an all-time high in February, averaging 276,654 units. This growth was fueled by steady consumer spending and some importers ordering extra shipments ahead of possible tariffs. So far in 2025, intermodal volume is up 8.5%, and container volume has jumped 9.5%, setting a new record for this period. Moving forward, intermodal growth will depend on consumer demand, which is closely tied to job market strength and potential trade policy shifts.
However, American railroads experienced a 4.5% drop in carloads, moving 843,618 units in February. In the last five months, January had the first increase in carloads, but harsh winter weather, including flooding in the Northeast and freezing temperatures across most of the country, interrupted operations and obstructed freight handling. Without these weather challenges, rail volumes likely would have been higher. Coal being the largest commodity moved by rail continued its downward trend, with carloads dropping 8.2% in February and marking the 14th consecutive month of declines.
As the US ramps up its trade war under President Trump, freight railroads are preparing for the fallout. New tariffs on Mexico, Canada, China, and the EU are set to take effect soon, potentially disrupting a massive trade network. In 2024, American railroads handled $203.1 billion in cross-border trade with Canada and Mexico, being almost evenly split between the two, as reported by CNBC. The rail industry is a huge economic driver, generating $233.4 billion in output and supporting around 750,000 jobs in 2023. Texas is a major hub for freight rail employment since it handles most of the US to Mexico rail traffic. Railroads also reinvested $26.8 billion in infrastructure last year, mostly through private funding. As trade tensions rise, the industry remains focused on keeping goods moving and ensuring rail infrastructure stays strong.
Our Methodology
For this article, we focused on making a list of all railroad and railcar stocks that are publicly listed in the United States. Using Insider Monkey’s Q4 2024 hedge fund database, we examined the hedge fund sentiment for each stock and selected 10 most popular ones. The stocks are ranked in ascending order based on the number of hedge fund holders as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An intermodal container train winding through a rural landscape.
Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 93
Union Pacific Corporation (NYSE:UNP) is a Nebraska-based provider of freight transportation services across the United States. The company transports agricultural products, coal, renewable fuels, construction materials, chemicals, metals, and automotive goods. On February 6, 2025, the company declared a quarterly dividend of $1.34 per share, set to be paid on March 31, to shareholders on record as of February 28. The company has been paying dividends for 126 years straight.
In the fourth quarter of 2024, Union Pacific Corporation (NYSE:UNP) posted a net income of $1.8 billion, up from $1.7 billion a year ago. Revenue came in at $6.1 billion, down 1%, mainly due to lower fuel surcharge revenue and a weaker business mix, though higher volume and core pricing gains helped offset some of the drop. On the bright side, revenue carloads were up 5%, and the operating ratio improved by 220 basis points to 58.7%. Overall, operating income rose 5% to $2.5 billion. UNP ranks 1st on our list of the best railroad stocks to buy.
According to Insider Monkey’s fourth quarter database, 93 hedge funds were long Union Pacific Corporation (NYSE:UNP), compared to 78 funds in the prior quarter. Arrowstreet Capital was a prominent stakeholder of the company, with a position worth $558 million.
Overall, UNP ranks 1st on our list of best railroad stocks to buy now. While we acknowledge the potential of UNP as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UNP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.